Many experts in international trade claim that providing : Critical Reasoning (CR)

sudhir18n

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12 Jul 2011, 08:26

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DYNAMITE

Many experts in international trade claim that providing low- or no-interest loans to start-up businesses in the third world will ultimately benefit American businesses. They claim that these start-up businesses may introduce new markets or products that American businesses will later be able to take advantage of, providing a greater long-term benefit than a higher rate of interest ever could.

Each of the following statements, if true, weakens the conclusion EXCEPT:

(A) 95% of third-world start-ups go out of business within their first two years on the market.

(B) Third-world start-ups tend to focus on niche markets that are not particularly susceptible to foreign competition.

(C) Many third-world countries have regulations that make it difficult for foreign interests to take advantage of successful domestic companies.

(D) Third-world countries with successful domestic businesses usually increase their consumption of imported goods dramatically.

(E) Many third-world governments choose to nationalize important industries as soon as they begin to produce significant exports.

Hey guys please explain your reasoning for your answer choice!

I go with D ;
If they import goods, it shows the market is growing.. and its beneficial for any new/foreign player to step in .

DYNAMITE

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12 Jul 2011, 08:46

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I'm having trouble understanding why B is the wrong answer. Since they aren't susceptible to foreign competition they will be able to grow at a faster rate thus allowing the US to take advantage of them. IMO - a clear strengthener. Thanks!

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12 Jul 2011, 09:16

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DYNAMITE

I'm having trouble understanding why B is the wrong answer. Since they aren't susceptible to foreign competition they will be able to grow at a faster rate thus allowing the US to take advantage of them. IMO - a clear strengthener. Thanks!

I concur!!

If B said:
Third-world start-ups tend to focus on niche markets that focuses only on limited products. Agreeable!!!

Also,
Third-world start-ups tend to focus on niche markets that are not particularly susceptible to foreign competition.

It doesn't look like that the US companies that will try to take advantage of these businesses would also be in direct competition with them so as to be hurt.

No idea!!!

However, it is also evident that "D" strengthens the argument.

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12 Jul 2011, 09:28

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Yup, I was stuck between B & D on the practice set I was doing, and, of course, I picked the wrong one.

Thanks for the perspective fluke!

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12 Jul 2011, 20:55

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IMO D strengthens the conclusion though slightly

.

E is out of bounds. A, B and C weaken the conclusion.

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12 Jul 2011, 21:35

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DYNAMITE

I'm having trouble understanding why B is the wrong answer. Since they aren't susceptible to foreign competition they will be able to grow at a faster rate thus allowing the US to take advantage of them. IMO - a clear strengthener. Thanks!

The stimulus states that third world start-up businesses may introduce "new markets" or products that American businesses will later be able to take advantage of. Choice B says that the markets introduced by the third world start-ups tend be highly specialized and thus impervious to foreign competition (i.e the American businesses will not be able to take advantage of these markets in the third world countries). Choice B does not mean that these third world start-ups themselves are immune to foreign competition. Choice B weakens the argument.

In this question - Choice D actually strengthens the argument -- but this may not always be the case in these "Except" questions. The correct answer choice can also be neutral. For example -- if you had a choice that said -- "A majority of the start-ups in the third world countries are founded by women" --- that would be your correct response for this "except" question because it's a neutral statement. It neither weakens the author's conclusion nor strengthens it.

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13 Jul 2011, 06:55

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I go with D. "They claim that these start-up businesses may introduce new markets or products that American businesses will later be able to take advantage of, providing a greater long-term benefit than a higher rate of interest ever could."

Only D does not weaken the argument as it says that the startups would import foreign goods and technology.

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13 Jul 2011, 07:09

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I see. This was actually a phrasing misintepretation on my part. Its that the relative pronoun "that" refers to the foreign markets and not to the starts up. Since the niche markets are susceptible to foreign competition, the US can't really enter them!

Thanks for clearing this up!

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13 Jul 2011, 09:37

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B Clearly weakens the argument by saying that the foreign businesses may not even be in the competition in the specific niche market.

D Strengthens the argument by saying with the success of third world countries, a surge in consumer demand will open a big market segment for foreign businesses.

So, I'd go with 'D' as the correct answer

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18 Jul 2011, 08:08

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Pardon my ignorance, but I still don't get why B is wrong?

(B) Third-world start-ups tend to focus on niche markets that are not particularly susceptible to foreign competition''

The conclusion is that american business will not benefit from these third world start ups, right?
According to B, if the third world start ups in nice markets are not susceptible to foreign competition, then it should be GOOD news for American businesses because they benefit from these companies right? I mean they don't need to be in competition to be benefiting from the businesses right?

Can someone explain in detail? Thanks.

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18 Jul 2011, 13:40

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even i don't understand yet why B s wrong...
doing well in a niche market is good for the business..
The only way i can convince myself of D as the correct choice is by thinking that the 3rd-world Company is doing well in a niche market and since the statement says that the company is not susceptible to FOREIGN competition, US companies cannot benefit from the good show of the 3rd world company as the US companies probably cannot match the 3rd world company in expertise,technology among others as it is a NICHE market..

hope i am right in my thinking??

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18 Jul 2011, 21:10

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LifeChanger

even i don't understand yet why B s wrong...
doing well in a niche market is good for the business..
The only way i can convince myself of D as the correct choice is by thinking that the 3rd-world Company is doing well in a niche market and since the statement says that the company is not susceptible to FOREIGN competition, US companies cannot benefit from the good show of the 3rd world company as the US companies probably cannot match the 3rd world company in expertise,technology among others as it is a NICHE market..

hope i am right in my thinking??

How does the argument say US will be able to have a long term benefit from these companies? By opening products and markets which US can take advantage of - that is enter later. B says these are the kind of markets where forign competition is not successful - clearly it weakens the argument's very premise that US will be bale to get benifit by entering this market later

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06 Feb 2015, 01:50

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Each of the following statements, if true, weakens the conclusion EXCEPT:

To attack this kind of questions we need to find an answer choice that is neutral or strengthens the conclsuion.
EXCEPT means that 4 WRONG answer choices weaken the argument and 1 correct answer strngthens the argument or is neutral.

(A) 95% of third-world start-ups go out of business within their first two years on the market. -> Clearly weakens the argument

(B) Third-world start-ups tend to focus on niche markets that are not particularly susceptible to foreign competition.-> Clearly weakens the argument

(C) Many third-world countries have regulations that make it difficult for foreign interests to take advantage of successful domestic companies. -> Clearly weakens the argument

(D) Third-world countries with successful domestic businesses usually increase their consumption of imported goods dramatically. -> CORRECT - it strengthens the argument, as it have a positive effect for foreign companies

(E) Many third-world governments choose to nationalize important industries as soon as they begin to produce significant exports. -> Clearly weakens the argument

Hey guys please explain your reasoning for your answer choice!

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27 Apr 2015, 19:09

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A,C,E are facts which weakens the conclusion .It leaves B and D .Focus on niche market may/may not give a good return on the investment .
But D clearly states that consumption of imported goods increase .Hence D is the logical choice.

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Side note - the term "third world" is outdated, refers to cold-war geopolitics (countries that did not align with the West or its communist rivals). I believe the term that would have been more appropriate here is "developing countries" or "low-income" countries. Grateful for the question as a GMAT student, but must call out the phrase "third world" as rather unfortunate as used here

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10 Dec 2015, 10:49

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Clearly and undoubtedly D.
Think If this statement was added in the passage,it will go along with it,meaning you can add this piece of info using 'in addition', instead of but.So,it clearly strengthens the conclusion as does premise do.The other options either evidently weaken it or indirectly does.

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18 May 2021, 10:29

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LifeChanger

even i don't understand yet why B s wrong...
doing well in a niche market is good for the business..
The only way i can convince myself of D as the correct choice is by thinking that the 3rd-world Company is doing well in a niche market and since the statement says that the company is not susceptible to FOREIGN competition, US companies cannot benefit from the good show of the 3rd world company as the US companies probably cannot match the 3rd world company in expertise,technology among others as it is a NICHE market..

hope i am right in my thinking??

Many experts in international trade claim that providing low- or no-interest loans to start-up businesses in the third world will ultimately benefit American businesses. They claim that these start-up businesses may introduce new markets or products that American businesses will later be able to take advantage of, providing a greater long-term benefit than a higher rate of interest ever could.

They claim that American businesses will later be able to take advantage of new markets or products.

(B) Third-world start-ups tend to focus on niche markets that are not particularly susceptible to foreign competition.

Option B says that start-ups tend to focus on niche markets. These niche markets are not susceptible to foreign competition. In other words, these niche markets are not likely to be influenced by foreign competition. So basically these startups will not develop new market or products in America. So there will not be any long term benefit.

Hope it helps!

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